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The political controversy engulfing the Trump White House knocked stocks lower across the globe last week, but bullish investors responded by snapping up shares the next day, and such knee-jerk reactions are typical of consolidation patterns.

Back in January I suggested that as a measure of success we should compare our net profits to what Lady Luck would have shown in the year to date. So in truth how did we all compare? Did we earn in percentage terms more than a toss of a coin?

Without any news for the market to process, we are back to a state of depressed volatility. This means that the premium for protection is also quite low, which is something that equity investors should keep in mind.

Recession risk is rising with big allocation implications - today's ADP report is the worst in three years! Add to this that the Fed's broad based employment index (# 19 data points) is also making new lows and we have potential for a dramatic change in MAIN MACRO concern: I.e: concern will be recession risk

Classic economic theory reads that when the labour market turns sour so do markets

Add to this: economic data ALREADY has been weak for a long period - unlike EUR which is doing "better than"

This means that we have overweight in US fixed income - trade was done FOMC meeting in this link:

Action: If nonfarm payrolls on Friday confirms today's ADP number then we could start a big move towards NEW LOWS in US yields.... this would also help EURUSD and gold higher, but the main move would be in fixed income where the market is net SHORT